Like the ANC, SA’s biggest pension fund manager had two centres of power

The ANC and Public Investment Corporation (PIC) had something in common in recent years: The concept of two centres of power.

The ANC battled to distinguish between party and state, as it once had two individuals as party president and the country’s president at the same time. This was recently seen when Jacob Zuma called the shots at the Union Buildings during his presidency’s dying days while Cyril Ramaphosa did the same at Luthuli House after he emerged victorious at the ANC’s leadership contest in 2017.

At the PIC, South Africa’s biggest pension fund manager with about R1.8-trillion of state workers’ funds, the two centres of power concept is slightly different. The power and decision to invest public servants’ money at the PIC appears to have been concentrated in two executive roles — the CEO and CFO.

This has been described as the two centres of power by current and former PIC employees at the commission of inquiry into allegations of impropriety and governance deficiencies at the PIC.

The CEO and CFO roles were occupied by Dan Matjila and Matshepo More respectively. More was eventually appointed acting CEO when Matjila resigned in November 2018.

She didn’t last long in the top job. More was suspended in March 2019 for allegedly interfering in the PIC inquiry’s work by victimising employees who wanted to testify. She has denied this allegation, saying it is “unfounded”.

Matjila and More face allegations of tightly controlling investment decisions, creating a climate of fear and using public servants’ money to invest in questionable deals — even flouting approval processes.

In More’s case, she signed off on the controversial R4.3-billion investment in Ayo Technology Solutions, majority-owned by Sekunjalo Investments, which in turn is owned by Iqbal Survé. Survé is also the chair of the Sekunjalo Group.

To recap: The Ayo deal was controversial due to the high valuation it commanded when it listed in 2017 on the JSE, which saw the PIC take a 29% stake at R43/share. Ayo’s shares were worth R11 by the close of markets on Monday 24 June 2019, meaning that the PIC has lost about R3-billion from its initial investment.

CEO and CFO role

During her testimony at the PIC inquiry on Monday, More denied that she was part of the money manager’s two centres of the power structure. She said investment decisions were not made unilaterally as they were supported by the board’s investment committee.

However, she inferred that political meddling at the PIC, which led to restructured executive roles at the money manager, created the impression of two centres of power.

More said the restructuring took place in 2015, which resulted in the creation of new executive roles to better manage its large listed and unlisted investment portfolio.

Roles such as the executive of corporate services, executive of human resources, head of legal and head of IT were established, which replaced the chief operations officer (COO) role.

The chief investment officer (CIO) role was merged with the CEO role, giving Matjila more power and control of the PIC. The CFO role was not changed, which was held by More. In other words, two executive directors — Matjila and More, the CEO and CFO respectively — had influence in the investment decision-making process.

She defended the restructuring, saying it was global best practice. More cited Canada’s state pension fund which she said had two executive roles — a CEO and CFO.

Granted, the PIC has a socio-economic development mandate, but it is a money manager like its private asset management peers, which usually have an administrative CEO and CFO role and a distinct CIO role for supervising investment opportunities.

Back to political meddling in the PIC.

In order to implement the new executive structure, the PIC’s memorandum of incorporation (MOI), a Companies Act-governed document that outlines the roles and fiduciary duties of directors and executives, had to be amended.

More said the PIC board and former finance minister Pravin Gordhan approved the MOI amendment, giving effect to the new CEO and CFO executive structure. The finance ministry oversees the PIC.

Malusi Gigaba, whom Zuma appointed in 2017 to replace Gordhan, wanted the original MOI to remain in force, said More, without elaborating on the reason(s) for Gigaba’s change of heart. Gigaba’s request came late as the CIO and COO roles had already been done away with. This infers that the PIC contravened the Companies Act because the money manager’s executive structure must go hand-in-hand with its MOI.

More continues her testimony on Tuesday. She will explore her role in the PIC’s Ayo investment. BM